DR. (MRS). URMILA M. DESAI, MUMBAI v. ITO WD 19(2)(2), MUMBAI

ITA 1048/MUM/2009 | 2005-2006
Pronouncement Date: 13-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 104819914 RSA 2009
Assessee PAN AFUPD8328K
Bench Mumbai
Appeal Number ITA 1048/MUM/2009
Duration Of Justice 1 year(s) 1 month(s) 27 day(s)
Appellant DR. (MRS). URMILA M. DESAI, MUMBAI
Respondent ITO WD 19(2)(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 13-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 13-04-2010
Date Of Final Hearing 23-02-2010
Next Hearing Date 23-02-2010
Assessment Year 2005-2006
Appeal Filed On 16-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH MUMBAI. BEFORE SHRI R.V.EASWAR SR.VP AND SHRI B.RAMAKOT AIAH AM I.T.A. NO.1048/MUM/2009 (ASSESSMENT YEAR: 2005-06) DR. (MRS.) URMILA M.DESAI 601 MARTINS NEST CENTRAL AVENUE SANTACRUZ(W) MUMBAI-400 054. PAN:AFUPD8328K VS. THE INCOME TAX OFFICER WARD- 19(2)(2) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. VIPUL JOSHI & MR.SAMEER DALAL RESPONDENT BY : MR. VIRENDRA OJHA DR O R D E R PER R.V.EASWAR SENIOR VICE PRESIDENT: THIS APPEAL IS BY THE ASSESSEE AND IT RELATES TO THE ASSESSMENT YEAR 2005-06. THE ASSESSEE IS AN INDIVIDUAL-RESIDENT. 2. THE FIRST THREE GROUNDS ARE DIRECTED AGAINST THE ASSESSMENT OF THE NOTIONAL INCOME FROM THE PROPERTY AT KAMLESHWAR BUILDING SANTACRUZ MUMBAI. THE ASSESS EE WHO IS A DOCTOR BY PROFESSION OWNED A FLAT IN THE AFOR ESAID BUILDING. SHE WAS A PARTNER IN M/S. GREEN CROSS A PARTNERSH IP FIRM RUNNING A NURSING HOME IN THE AFORESAID PREMISES WH ICH HAD BEEN ALLOWED BY THE ASSESSEE TO DO SO. THE ASSESSEE DID NOT CHARGE ANY RENT FROM THE FIRM. SHE WAS HOWEVER IN RECEIPT OF REMUNERATION AND SHARE OF PROFIT FROM THE AFORESAID FIRM. IN THE RETURN OF INCOME THE ASSESSEE DID NOT OFFER ANY INC OME FROM THE PROPERTY APPARENTLY CONTENDING THAT UNDER SECTION 22 OF THE INCOME TAX ACT ANY PROPERTY IN THE OCCUPATION OF T HE ASSESSEE FOR THE PURPOSES OF HIS BUSINESS OR PROFESSION WAS NOT CHARGEABLE TO INCOME-TAX UNDER THE HEAD INCOME FRO M HOUSE ITA NO.1048/M/09 2 PROPERTY. THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM AND BROUGHT AN ESTIMATED NET ANNUAL VALUE OF RS.1 48 96 0/- TO TAX AS INCOME FROM THE SAID PROPERTY SUBJECT TO DEDUCT ION UNDER SECTION 24. THE CIT(A) AGREED WITH THE ASSESSING OF FICERS VIEW. 3. THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRI BUNAL FIRSTLY CONTENDING THAT SECTION 22 APPLIES TO HER C ASE AND SECONDLY THAT IN ANY EVENT THE NET ANNUAL VALUE AS SESSED WAS VERY HIGH. IN OUR VIEW THE ASSESSEES CLAIM UNDER SECTION 22 IS WELL FOUNDED. TO RECAPITULATE SHE IS A PARTNER IN M/S. GREEN CROSS WHICH IS RUNNING A NURSING HOME FROM FLAT NO .2 KAMLESHWAR BUILDING SANTACRUZ MUMBAI. THE FLAT I S OWNED BY THE ASSESSEE. NOW IT IS WELL SETTLED THAT THOUGH A FIRM IS AN ASSESSABLE ENTITY UNDER THE INCOME TAX ACT IT IS N OT A LEGAL ENTITY AND IS ONLY A COMPENDIOUS EXPRESSION USED TO INDICATE THAT SEVERAL PERSONS CONSTITUTING THE FIRM ARE CARR YING ON THE BUSINESS. IN SHANTIKUMAR NAROTTAM MORARJI VS. CIT. (1955) 27 ITR 69 THE HONBLE BOMBAY HIGH COURT HELD THAT THE FIRM HAS NO LEGAL ENTITY OR EXISTENCE AND WHEN WE SAY THAT A FIRM IS CARRYING ON A BUSINESS UNDER LAW IT IS ONLY THE PA RTNERS WHO EXIST AND WHO ARE CARRYING ON THE BUSINESS. REFERRI NG TO SECTION 4 OF PARTNERSHIP ACT IT WAS HELD THAT WHEN YOU HAV E A PARTNERSHIP BUSINESS THE BUSINESS IS CARRIED ON BY EACH OF THE PARTNERS AND THE DEFINITION OF A PARTNERSHIP IN TH E PARTNERSHIP ACT HAS BEEN INCORPORATED IN THE INCOME TAX ACT 196 1 IN SECTION 2(23). WE THEREFORE AGREE WITH THE CONTENTI ON OF THE ASSESSEE THAT SHE IS OCCUPYING THE FLAT FOR THE PUR POSES OF HER PROFESSION THE PROFITS OF WHICH ARE CHARGEABLE TO INCOME-TAX. THEREFORE THE NOTIONAL INCOME FROM THE FLAT CANNOT BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN THE LIGHT OF THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT(SUPRA) IT IS NOT NECESSARY TO REFER TO THE JUDGEMENTS OF THE KARNATA KA DELHI AND CALCUTTA HIGH COURTS REFERRED TO BY THE CIT(A) IN PARA 3.4 OF ITA NO.1048/M/09 3 HIS ORDER. HOWEVER WE MAY REFER TO THE JUDGEMENT O F THE GUJARAT HIGH COURT IN CIT VS. RASIKLAL BALABHAI (19 79) 119 ITR 303 WHERE THERE IS REFERENCE TO THE JUDGEMENT OF T HE HONBLE BOMBAY HIGH COURT CITED ABOVE. AT PAGE 310 THE GUJ ARAT HIGH COURT HELD THAT IF THE BUSINESS OF THE PARTNERSHIP IS CARRIED ON BY EACH OF THE PARTNERS THEN THE CONTENTION THAT TH E PARTNER IS NOT IN OCCUPATION OF THE PROPERTY FROM WHICH THE FI RM CARRIES ON BUSINESS WOULD BE SOMETHING DE HORS COMMON SENSE. RESPECTFULLY FOLLOWING THE JUDGEMENTS OF THE BOMBAY & GUJARAT HIGH COURTS WE DIRECT THE ASSESSING OFFICER TO EXC LUDE THE ANNUAL VALUE OF THE PROPERTY FROM THE ASSESSMENT. I N THE VIEW WE HAVE TAKEN IT IS NOT NECESSARY TO EXAMINE THE AL TERNATIVE CONTENTION THAT ESTIMATE OF THE ANNUAL VALUE IS ARB ITRARY AND VERY HIGH. THE GROUNDS ARE ALLOWED. 4. THE 4 TH & 5 TH GROUNDS RELATE TO THE NOTIONAL RENT ASSESSED IN RESPECT OF PREMISES AT S.PADRI GOA. THERE IS NO DISPUTE THAT THE NOTIONAL RENT IS TAXABLE BUT THE CONTENTION IS THAT THE ANNUAL LETTING VALUE RS.2 18 610/- TAKEN ON THE BAS IS OF 7% OF THE VALUE OF THE PREMISES AT RS.31 23 000/- IS VERY HIGH. THE FINDING OF THE CIT(A) IS THAT THE ASSESSEE GOES AND STAYS IN THE PROPERTY WHEN SHE VISITS GOA. HE HAS ALSO HELD THAT MERE OWNERSHIP OF THE PROPERTY IS SUFFICIENT TO ATTRACT THE TAXABILITY OF THE ANNUAL LETTING VALUE. HE HAS FOUND THAT THE ACT ION OF THE ASSESSING OFFICER IN ESTIMATING THE ANNUAL LETTING VALUE OF THE PROPERTY AS A PERCENTAGE OF THE TOTAL VALUE OF THE PROPERTY CANNOT BE FAULTED. WE FIND THAT IN THE IMMEDIATELY NEXT ASSESSMENT YEAR (2006-07) THE ASSESSING OFFICER HA S TAKEN THE ANNUAL LETTING VALUE OF THE PROPERTY AT 5% OF THE E STIMATED VALUE OF THE PROPERTY WHICH COMES TO RS.1 56 150/-. FOR THE ASSESSMENT YEAR 2007-08 IT HAS BEEN REDUCED TO 4% OF THE VALUE WHICH COMES TO RS.1 24 920/-. TAKING THE SUB SEQUENT ASSESSMENTS INTO CONSIDERATION WE THINK IT WOULD B E FAIR AND ITA NO.1048/M/09 4 REASONABLE TO ASSESS THE ANNUAL VALUE OF THE GOA PR OPERTY AT RS.1 25 000/- FOR THE YEAR UNDER APPEAL SUBJECT TO DEDUCTION UNDER SECTION 24. WE DIRECT ACCORDINGLY. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART. ORDER PRONOUNCED ON THIS 13 TH DAY OF APRIL 2010. SD/- (B.RAMAKOTAIAH) SD/- ( R.V.EASWAR ) ACCOUNTANT MEMBE R SENIOR VICE PRESIDENT MUMBAI DATED 13 TH APRIL 2010. SOMU COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-19 MUMBAI. 4. THE CIT(A)-XIX MUMBAI 5. THE DR F BENCH /TRUE COPY/ BY ORDE R ASSTT. REGISTRAR I.T.A.T MUMBAI